GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1999

S	3 

SENATE BILL 594
Insurance Committee Substitute Adopted 4/22/99
House Committee Substitute Favorable 6/22/99

Short Title:  Miscellaneous Ins. Changes.	(Public)

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Sponsors:

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Referred to:  

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March 29, 1999

A BILL TO BE ENTITLED
AN ACT TO CLARIFY THE LAWS ON TITLE INSURANCE RATE MAKING, COMMERCIAL GENERAL LIABILITY POLICY EXTENDED REPORTING, AND INSURANCE FRAUD; TO MAKE A TECHNICAL CORRECTION IN THE LITTERING LAW; TO PROVIDE FOR UNIFORM APPLICATION OF NEW LAWS TO HEALTH BENEFIT PLANS; TO AMEND THE LAW GOVERNING CEASE AND DESIST ORDERS FOR UNAUTHORIZED INSURERS; TO ALLOW LICENSING OF A FOREIGN OR ALIEN INSURER TO BE DELAYED UNDER CERTAIN CIRCUMSTANCES; TO AMEND THE LAW GOVERNING AN INSURER'S ACKNOWLEDGMENT OF A CLAIM; TO PROVIDE THAT POLICIES WRITTEN BY SURETY BONDSMEN ARE SUBJECT TO THE LAW GOVERNING THE USE OF DEPOSITS FOR UNPAID LIABILITIES; TO DELAY THE EFFECTIVE DATE FOR THE REGULATION OF THIRD-PARTY ADMINISTRATORS FOR SELF-INSURED WORKERS' COMPENSATION; TO AMEND THE LAW ON COVERAGE FOR NONFORMULARY DRUGS; AND TO MAKE VARIOUS TECHNICAL CHANGES.
The General Assembly of North Carolina enacts:
Section 1.  G.S. 58-41-10(a) reads as rewritten:
"(a)	Except as otherwise provided, this Article applies to all kinds of insurance authorized by G.S. 58-7-15(4) through (14) and G.S. 58-7-15(18) through (22), and to all insurance companies licensed by the Commissioner to write those kinds of insurance. This Article does not apply to insurance written under Articles 21, 26, 36, 37, 45 or 46 of this Chapter; insurance written for residential risks in conjunction with insurance written under Article 36 of this Chapter; to marine insurance as defined in G.S. 58-40-15(3); to personal inland marine insurance; to aviation insurance; to policies issued in this State covering risks with multistate locations, except with respect to coverages applicable to locations within this State; to any town or county farmers mutual fire insurance association restricting its operations to not more than six adjacent counties in this State; nor to domestic insurance companies, associations, orders, or fraternal benefit societies doing business in this State on the assessment plan."
Section 2.  G.S. 58-40-140(a) reads as rewritten:
"(a)	Any policy for commercial general liability coverage or professional liability insurance wherein the insurer offers, and the insured elects to purchase, an extended reporting period for claims arising during the expiring policy period must provide:
(1)	That in the event of a cancellation permitted by G.S. 58-41-15 or nonrenewal effective under G.S. 58-41-20, there shall be a 30-day period after the effective date of the cancellation or nonrenewal during which the insured may elect to purchase coverage for the extended reporting period.
(2)	That the limit of liability in the policy aggregate for the extended reporting period shall be one hundred percent (100%) of the expiring policy aggregate that was in effect at the inception of the policy.
(3)	Within 45 days after the mailing or delivery of the written request of the insured, the insurer shall mail or deliver the following loss information covering a three-year period:
a.	Aggregate information on total closed claims, including date and description of occurrence, and any paid losses;
b.	Aggregate information on total open claims, including date and description of occurrence, and amounts of any payments;
c.	Information on notice of any occurrence, including date and description of occurrence."
Section 3.  G.S. 58-2-161(a) reads as rewritten:
"(a)	For the purposes of this section:
(1)	'Insurer' has the same meaning as in G.S. 58-1-5(3) and also includes:
a.	Any hull insurance and protection and indemnity club operating under Article 20 of this Chapter.
b.	Any surplus lines insurer operating under Article 21 of this Chapter.
c.	Any risk retention group or purchasing group operating under Article 22 of this Chapter.
d.	Any local government risk pool operating under Article 23 of this Chapter.
e.	Any risk-sharing plan operating under Article 42 of this Chapter.
f.	The North Carolina Insurance Underwriting Association operating under Article 45 of this Chapter.
g.	The North Carolina Joint Insurance Underwriting Association operating under Article 46 of this Chapter.
h.	The North Carolina Insurance Guaranty Association operating under Article 48 of this Chapter.
i.	Any multiple employer welfare arrangement operating under Article 49 of this Chapter.
j.	The North Carolina Life and Health Insurance Guaranty Association operating under Article 62 of this Chapter.
k.	Any service corporation operating under Article 65 of this Chapter.
l.	Any health maintenance organization operating under Article 67 of this Chapter.
m.	The Teachers' and State Employees' Comprehensive Major Medical Plan operating under Chapter 135 of the General Statutes.
n.	A group of employers self-insuring their workers' compensation liabilities under Article 47 of this Chapter.
o.	An employer self-insuring its workers' compensation liabilities under Article 5 of Chapter 97 of the General Statutes.
p.	The North Carolina Self-Insurance Guaranty Association under Article 4 of Chapter 97 of the General Statutes.
q.	Any reinsurer licensed or accredited under this Chapter.
(2)	'Statement' includes any application, notice, statement, proof of loss, bill of lading, receipt for payment, invoice, account, estimate of property damages, bill for services, diagnosis, prescription, hospital or doctor records, X rays, test result, or other evidence of loss, injury, or expense."
Section 4.  G.S. 14-399(f1) reads as rewritten:
"(f1)	If a violation of this section involves the operation of a motor vehicle, upon a finding of guilt, the court shall forward a record of the finding to the Department of Transportation, Division of Motor Vehicles, which shall record a penalty of one point on the violator's drivers license pursuant to the point system established by G.S. 20-16. There shall be no insurance premium surcharge or assessment of points under the classification plan adopted under G.S. 58-36-65 for a finding of guilt under this section."
Section 5.  Article 3 of Chapter 58 of the General Statutes is amended by adding a new section to read:
"§ 58-3-167.  Applicability of acts of the General Assembly to health benefit plans.
(a)	As used in this section:
(1)	'Health benefit plan' means an accident and health insurance policy or certificate; a nonprofit hospital or medical service corporation contract; a health maintenance organization subscriber contract; a plan provided by a multiple employer welfare arrangement; or a plan provided by another benefit arrangement, to the extent permitted by the Employee Retirement Income Security Act of 1974, as amended, or by any waiver of or other exception to that act provided under federal law or regulation. 'Health benefit plan' does not mean any plan implemented or administered by the North Carolina or United States Department of Health and Human Services, or any successor agency, or its representatives.  'Health benefit plan' does not mean any of the following kinds of insurance:
a.	Accident.
b.	Credit.
c.	Disability income.
d.	Long-term or nursing home care.
e.	Medicare supplement.
f.	Specified disease.
g.	Dental or vision.
h.	Coverage issued as a supplement to liability insurance.
i.	Workers' compensation.
j.	Medical payments under automobile or homeowners.
k.	Hospital income or indemnity.
l.	Insurance under which benefits are payable with or without regard to fault and that is statutorily required to be contained in any liability policy or equivalent self-insurance.
m.	Short-term limited duration health insurance policies as defined in Part 144 of Title 45 of the Code of Federal Regulations.
(2)	'Insurer' includes an insurance company subject to this Chapter, a service corporation organized under Article 65 of this Chapter, a health maintenance organization organized under Article 67 of this Chapter, and a multiple employer welfare arrangement subject to Article 49 of this Chapter.
(b)	Whenever a law is enacted by the General Assembly that applies to a health benefit plan, the term 'health benefit plan' shall be defined for purposes of that law as provided in subsection (a) of this section unless that law provides a different definition or otherwise expressly provides that the definition in this section is not applicable.
(c)	Whenever a law is enacted by the General Assembly that applies to health benefit plans that are delivered, issued for delivery, or renewed on and after a certain date, the renewal of a health benefit plan is presumed to occur on each anniversary of the date on which coverage was first effective on the person or persons covered by the health benefit plan."
Section 6. G.S. 58-28-20 reads as rewritten:
"§ 58-28-20.  Cease and desist orders.
(a)	Whenever the Commissioner, from evidence satisfactory to him, has reasonable grounds to believe that any person is violating or is about to violate G.S. 58-28-5, he may, after notice and opportunity for hearing, reduce his findings to writing and issue and cause to be served upon such person an order to cease and desist from violating G.S. 58-28-5.
(b)	Until the expiration of the time allowed under G.S. 58-28-25(a) for filing a petition for review, if no such petition has been duly filed within such time; or if a petition for review has been filed within such time, then until the transcript of the record in the proceeding has been filed in the Court, the Commissioner may at any time, upon such notice and in such manner as he considers proper, modify or set aside in whole or in part any order issued by him under this section.
(c)	After the expiration of the time allowed for filing a petition for review, if no such petition has been duly filed within such time, the Commissioner may at any time, after notice and opportunity for hearing, reopen and alter, modify, or set aside, in whole or in part, any order issued by him under this section, whenever in his opinion conditions of fact or of law have so changed as to require such action or if the public interest requires.
	(d) Whenever the Commissioner has evidence that any person has or is violating G.S. 58-28-5, or has or is violating any order or requirement of the Commissioner issued or promulgated by the Commissioner under this Article, and that the interests of policyholders, creditors, or the public may be irreparably harmed by delay, the Commissioner may issue a cease and desist order.  Notice of the cease and desist order and notice of hearing shall be delivered by first-class mail."
Section 7.  G.S. 58-16-5 is amended by adding a new subdivision to read:
"(8)	Satisfies the Commissioner that the operation of the company in this State would not be hazardous to prospective policyholders, creditors, or the general public."
Section 8. G.S. 58-5-63 reads as rewritten:
"§ 58-5-63.  Interest; liquidation of deposits for liabilities.
(a)	All insurance companies making deposits under this Article are entitled to interest on those deposits, which shall remain in the deposit accounts. The right to interest is subject to a company paying its insurance policy liabilities. If any company fails to pay those liabilities, interest accruing after the failure is payable to the Commissioner for the payment of those liabilities under subsection (b) of this section.
(b)	If any company fails to pay its insurance policy liabilities after those liabilities have been established by settlement or final adjudication, the Commissioner may liquidate the amount of the company's deposit and accrued interest specified in subsection (a) of this section that will satisfy the company's policy liabilities and make payment to the person to whom the liability is owed. After payment has been made, the Commissioner may require the company to deposit the amount paid out under this subsection.  As used in this section, 'insurance policy' includes a policy written by a surety bondsman under Article 71 of this Chapter."
Section 9. G.S. 58-3-100(c) reads as rewritten:
"(c)	The Commissioner may impose a civil penalty under G.S. 58-2-70 if an HMO, service corporation, MEWA, or insurer fails to acknowledge a claim within 30 days after receiving written notice of the claim, but only if the notice contains sufficient information for the insurer to identify the specific coverage involved.  Acknowledgement of the claim shall be made to the claimant or his legal representative advising that the claim is being investigated; or shall be a payment of the claim; or shall be a bona fide written offer of settlement; or shall be a written denial of the claim.  A claimant includes an insured, a health care provider, or a health care facility that is responsible for directly making the claim with an insurer."
Section 10. Section 58(b) of S.L. 1998-217 reads as rewritten:
"(b)	This section becomes effective January 1, 2002."
Section 11.(a) Section 2.1 of S.L. 1999-132 is repealed.
Section 11.(b) G.S. 58-30-10(14), as amended by Section 7.3 of S.L. 1999-132, reads as rewritten:
"(14)	'Insurer' means any entity that is or should be licensed under Articles 7, 16, 26, 47, 49, 65, or 67 of this Chapter or under Article 5 of Chapter 97 of the General Statutes. For the purposes of this Article, 'insurer' also includes continuing care retirement communities that are or should be licensed under Article 64 of this Chapter."
Section 12.(a) G.S. 58-36-75(b) and G.S. 58-36-75(e) are repealed.
Section 12.(b) G.S. 58-36-75(d) reads as rewritten:
"(d)	There shall be no Safe Driver Incentive Plan surcharges under G.S. 58-36-65 for accidents occurring when only operating a firefighting, rescue squad, or law enforcement vehicle in accordance with G.S. 20-125(b) and in response to an emergency if the operator of the vehicle at the time of the accident was a paid or volunteer member of any fire department, rescue squad, or any law enforcement agency. This exception does not include an accident occurring after the vehicle ceases to be used in response to the emergency and the emergency ceases to exist."
Section 13.  The Codifier of Rules may amend the text of the administrative rules in Title 11 of the North Carolina Administrative Code to reflect the recodification of Chapter 58 of the General Statutes.  An amendment pursuant to this section is exempt from Chapter 150B of the General Statutes and review by the Rules Review Commission to the extent that it does not change the substance of the rule.
Section 14.(a) G.S. 58-3-221(c), as enacted by S.L. 1999-178, reads as rewritten:
"(c)	As used in this section:
(1)	'Closed formulary' means a list of prescription drugs and devices reimbursed by the insurer that excludes coverage for drugs and devices not listed.
     (2)	'Health benefit plan' means an accident and health insurance policy or certificate; a nonprofit hospital or medical service corporation contract; a health maintenance organization subscriber contract; a plan provided by a multiple employer welfare arrangement; or a plan provided by another benefit arrangement, to the extent permitted by the Employee Retirement Income Security Act of 1974, as amended, or by any waiver of or other exception to that Act provided under federal law or regulation.  'Health benefit plan' does not mean any plan implemented or administered by the North Carolina Department of Health and Human Services or the United States Department of Health and Human Services, or any successor agency, or its representatives.  'Health benefit plan' also does not mean any of the following kinds of insurance:
a.	Accident.
b.	Credit.
c.	Disability income.
d.	Long-term care or nursing home care.
e.	Medicare supplement.
f.	Specified disease.
g.	Dental or vision.
h.	Coverage issued as a supplement to liability insurance.
i.	Workers' compensation.
j.	Medical payments under automobile or homeowners.
k.	Hospital income or indemnity.
l.	Insurance under which benefits are payable with or without regard to fault and that are statutorily required to be contained in any liability policy or equivalent self-insurance.
     (3)	'Insurer' means an entity that writes a health benefit plan and that is an insurance company subject to this Chapter, a service corporation organized under Article 65 of this Chapter, a health maintenance organization organized under Article 67 of this Chapter, or a multiple employer welfare arrangement under Article 49 of this Chapter."
Section 14.(b)	G.S. 58-3-221, as enacted by S.L. 1999-178, is amended by adding a new subsection to read:
"( d)	Nothing in this section requires an insurer to pay for drugs or devices or classes of drugs or devices related to a benefit that is specifically excluded from coverage by the insurer."
Section 15. Sections 1 through 3 and Sections 5 through 9 of this act become effective October 1, 1999.  The remaining sections of this act are effective when they become law.